What Are the FHA Mortgage Regulations?

A borrower must meet regulations to qualify for an FHA mortgage.

The Federal Housing Administration, which is a branch of a government agency called the U.S. Department of Housing and Urban Development, regulates the FHA mortgage insurance program. FHA mortgage insurance allows low- and moderate-income people to obtain mortgage loans, because the government takes away the lender's risk. If a borrower defaults on an FHA-insured loan, then the government pays off the loan.

Mortgage Limitations

The FHA mortgage regulations set maximum loan amounts. The maximum amount can vary widely depending on where the borrower lives. Of course, the limitations apply to the mortgage amount only, and not necessarily to the purchase price of the home--so if the borrower makes a large down payment, he can still qualify for an FHA mortgage even if the home value exceeds the FHA mortgage limit for the area.

Income Requirements

The FHA mortgage regulations set certain income requirements to qualify for a loan. A minimum income is not required, but a minimum debt-to-income ratio is. Specifically, the regulations do not allow a borrower's monthly mortgage payment to be more than 29 percent of his gross monthly income. Similarly, a borrower cannot qualify for an FHA mortgage if his total monthly payments on all long-term debt, including mortgage, car, personal and student loans, exceeds 41 percent of his gross monthly income.

Credit and Down Payment

The FHA mortgage regulations regarding credit and down payment requirements are closely related. Generally, a borrower with a credit score of at least 500 can qualify for an FHA loan. However, if the borrower's score is below 580, then the borrower must provide at least a 10 percent down payment. A borrower with a credit score of 580 or higher can make a down payment of only 3.5 percent. Despite the credit score, though, a borrower generally cannot qualify for an FHA loan if he has an unresolved tax lien or has declared bankruptcy within the past two years.

About the Author

The Constitution Guru has worked as a writer and editor for "BYU Law Review" and "BYU Journal of Public Law." He is an experienced attorney with a law degree and a B.A. degree in history with an emphasis on U.S. Constitutional history, both earned at Brigham Young University.